중앙데일리

Watchdog plans to raise visibility of bond funds

‘We will work on developing bond funds that appeal to Koreans.’

Jan 09,2008
Introducing high-yield bond funds are among the plans of the top local financial watchdog, the agency announced yesterday. It will introduce funds that deal in junk bonds and monthly dividend bonds in an attempt to nurture the country’s declining bond fund market.
The watchdog hopes to make bond funds as popular as their counterparts that deal in stocks. The plans, however, are being questioned by some market watchers who say the appeal of stock funds is so strong that bond funds will not be able to compete in the near future.
Jeon Hong-yul, deputy governor of the Financial Supervisory Service, said in a weekly briefing that the watchdog will study measures to introduce various bond funds to Korean investors.
“Amid the high popularity of mutual fund investment in Korea, which has led to every Korean household having at least one mutual fund on average, only stock funds have recorded rapid growth, while bond funds keep losing money,” Jeon said. “To induce the stable growth of the local mutual fund market, we will work on developing bond funds that will appeal to Korean investors.”
The total invested in bond funds in Korea was 43.8 trillion won ($46.6 billion) as of last November, accounting for 14.7 percent of the total in mutual funds, the FSS said. The corresponding amount for stock funds was 106.6 trillion won. In December 2004, the amount in bond funds was 75.9 trillion won while stock funds amounted to 8.6 trillion won.
Eunice Yi, an analyst at Woori Investment and Securities, doubted the effectiveness of the FSS plans. “Though expected to be less impressive than last year, the stock market this year will be O.K. and will attract many retail investors into stock funds,” she said.
The average return of stock funds between November 2006 and November 2007 was 52.2 percent while that of bond funds was 3.2 percent, according to the FSS.

By Moon Gwang-lip Staff Reporter [joe@joongang.co.kr]



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